About Government Refinance and Home Purchase Programs

The downward trend in mortgage interest rates that started a few weeks ago has continued unabated. Mortgage interest rates are now at new lows for 2014 and the downturn in the stock market stock market this week has helped that trend. A string of disappointing reports on the state of the U.S. economy has sent stock buyers running into bonds and that retreat by investors has lowered the yields on bonds which in turn is lowering mortgage rates. Mortgage rates are not approaching the all time lows on rates we saw in 2012 yet but this downturn in the market has created some of the lowest rates we have seen in the last 12 months.

If you have considered refinancing your mortgage, contact us right away in the form in the sidebar. Or if you are looking into buying a home contact us in the form on our home purchase page. There is no telling how long this current dip in rates will last so moving quickly is a good idea.

On the heels of the recent surprisingly bad U.S. GDP report, mortgage interest rates have been dropping in the last week. That GDP news has driven investors away from stocks and toward bonds which in turn has been compressing the yield on bonds. As of Friday the yield on the 10 year Treasury Note was just a tenth of a percent above its 2014 low. As a result, mortgage interest rates are testing new 2014 lows this week as well.

If you have considered investigating a government backed mortgage, now is a great time to get the ball rolling. Fill in the contact form on your right for guidance on refinances. For help with government backed home purchase programs fill in the contact form on our home purchase page.

Are you interested in seeing the trend in government-back mortgage interest rates? The easiest way is to track the yields on the 10 year Treasury Note, also called the 10 year T-Note. While this is only a rule of thumb way to track rates, it is one of those rules of thumb that is generally reliable and useful.

What we are seeing lately is that the par rate, or rate that requires no buy down, on 30 year fixed conventional (Fannie/Freddie) mortgages have been coming in at roughly 2% higher than the yield on the 10 year T-Note. For instance, the yield on the 10 year T-Note closed at 2.59% yesterday. The par rate on 30 year fixed conventional mortgages was roughly 2% higher than that, coming in around the mid 4’s. With FHA and VA loans the par rate has lately been coming in about 1.6% higher than the T-Note yield. So as of yesterday the par rate on 30 year fixed FHA and VA loans was in the very low 4’s.

Keep in mind that there are other factors involved in mortgage rate trends so this rule of thumb is just that; a quick, rough way of estimating trends. Also, this is just the current trend on 30 year fixed loans — rates for government-backed 15 year mortgages or the various ARM mortgages available tend to be significantly lower than 30 year fixed rates.

The good news is that mortgage interest rates remain very low by historical measures. That is excellent for anyone looking to buy a home. It is also good news for anyone looking to refinance to a better mortgage. Contact us today for more guidance on available programs and rates.

Predictions of mortgage interest rates shooting up have been floating around for many months. In May of 2013 when mortgage rates moved higher on whispers that the Fed was going to take its foot off the pedal with regard to its Quantitative Easing program, some pundits speculated that mortgage interest rates would move steadily higher for years to come. But a funny thing happened — rates leveled out last summer and haven’t made an major, lasting moves since then. Rates on most 30 year fixed Fannie/Freddie conventional loans have remained in the mid to high 4’s and rates on 30 year fixed FHA and VA loans have stayed in the mid to low 4’s.

There is no telling what will happen to rates going forward, and it is still a safe bet that in the long run rates will move higher, but for now mortgage interest rates remain quite low by historical measures. With Ben Bernanke out as the Fed Chair and Janet Yellen running the show at the Fed now, it remains to be seen what the Fed will do to continue to stimulate the sluggish US economy.

While the future of mortgage interest rates is unknown, what is known is that rates are historically low right now. If you have considered purchasing a home or refinancing your current mortgage, now is an excellent to contact us to learn more about the various government-backed mortgage programs that are still available.

Just fill in the contact form in the sidebar for refinance information or for home purchase programs fill in the form on this page.

Of the four main government-backed home purchase programs, the Fannie Mae program requires the biggest down payment, with a down payment requirement of at least 5%. In addition, the Fannie Mae program has stricter debt-to-income ratio requirements as well as higher credit score requirements than some of the other programs. Despite all of this, the Fannie Mae program remains a popular choice for those who can qualify for it for a couple of reasons:

1. No up front fees: The VA charges a 2-3% up front fee, the USDA rural housing program charges 2% up front, and the FHA charges a 1.75% up from mortgage insurance premium. With the Fannie Mae program there is no up front fee and that saves buyers thousands of dollars in many cases.

2. Temporary mortgage insurance: With the FHA and USDA the mortgage insurance (or equivalent thereof in the case of USDA loans) is set for the life of the loan. With the Fannie Mae (conventional) program the mortgage insurance (sometimes call PMI) can be dropped when you have 22% equity in the home. And when a 20% down payment is used there is no mortgage insurance requirement at all.

Not everyone has the income, credit scores, or down payment needed to qualify for a Fannie Mae home purchase loan. For the folks who don’t, the VA, FHA, or USDA programs are excellent choices. But for folks who can qualify for a Fannie Mae loan, it can be the best choice.

Contact us in on our home purchase page to learn more about the Fannie Mae home purchase program as well as the other home purchase options.

On the surface, you might think the FHA home purchase program has some things going against it. FHA loans require a 1.75% up front fee rolled in to the loan and FHA loans include monthly mortgage insurance for the life of the loan as well. But there several tremendous advantages of the FHA program that keep it very popular.

1. Lenient credit requirements: While a minimum credit score of 620 is needed in most cases, the FHA is significantly more lenient on past credit blemishes than any of the other programs out there. The wait period after a chapter 13 bankruptcy in just 12 months and for chapter 7 bankruptcy it is just two years. The wait period after a foreclosure or short sale is just 3 years. And with FHA loans, while some outstanding collections must be paid off the FHA tends to allow medical collections to remain unsettled.

2. Less strict debt to income requirements: While the USDA and Fannie/Freddie purchase programs have very strict debt to income requirements, the FHA (and VA) programs tend to allow the ratios to stretch higher.

3. Lower and easier down payment requirements: The FHA only requires a 3.5% down payment. The minimum down payment for the Fannie/Freddie programs is 5%. Further, the FHA allows the 3.5% down payment to be given as a gift from family members. Other programs tend to be more strict about the down payment money coming from the borrower.

4. The FHA program is available to all: The VA program is only available to eligible military veterans and USDA rural housing program only applies to eligible areas considered sufficiently rural. While there are FHA restrictions on some condo complexes, the FHA program works on all single family homes in the US.

To learn more about the available government home purchase programs, including the FHA program, contact us on our home purchase page today.

There are two primary ways to buy a home with zero money down in 2014. The first is to be a military veteran and utilize the VA loan program. The second is to utilize the USDA Rural Housing Program.

The USDA loan program is designed to encourage people to spread out and buy a home out of the more densely populated urban areas. With the name “rural” in the title you might assume that this program only applies to homes way out in the country but that is not true. In many cases, suburbs just on the outskirts out of a city are eligible for the rural housing program. Click here to go to the USDA site and see a map of eligible areas.

Advantages of the USDA Rural Housing Home Purchase Program

• Requires no money down
• The monthly mortgage insurance is much smaller than FHA mortgage insurance

Requirements of the USDA Rural Housing Program

• Home must be in an eligible area
• Combined gross annual income of all household members normally must not exceed about $90,000
• Normally requires relatively good credit with few or no collections or similar blemishes on the credit history
• The USDA requires 2% funding fee up front that is rolled into the loan

Conclusion

In cases where the USDA rural housing program is an option, it is usually a more desirable programs than the FHA or Fannie/Freddie programs. It allows for a 30 year fixed loan with no money down and minimal mortgage insurance. Contact us in the form on our home purchase page for more guidance on getting qualified for a USDA rural housing home purchase loan.

Russia’s recent aggression toward its neighbor, Ukraine, sent financial markets reeling in recent weeks. That market instability has affected mortgage interest rates as well. Rates initially dipped as fears of a war sent investors rushing to bonds rather than stocks. But as the situation settled down the stock market surged again and they temporary dip in interest rates passed.

Long term, it is safe to assume that mortgage interest rates will move higher in 2014 and 2015. But for now rates remain relatively low. Contact us today if you are researching a refinance or a home purchase. There is no telling how long mortgage rates will remain at current levels before moving higher.

Spring officially begins in March and the spring season is traditionally a time when more families begin listing their homes for sale. The better weather along with the approaching end of the school year makes springtime a popular time for families to list a home for sale. That means spring is the best time of the year to find homes for sale all across America.

If you have considered purchasing a home, contact us in the form on our home purchase page right away. We can help point you in the right direction regarding the available government home purchase programs. With any luck you could get pre-qualified for a mortgage and start your house hunting process right away.

Can you buy a home with no money down in 2014? The simple answer is, yes. However there are caveats.

See our Home Purchase page here for an overview of the various government home purchase programs. The two main ways to buy a home with no money down in 2014 are:

1) Utilize the VA mortgage program
2) Go with the USDA rural housing program

In order to get a VA loan you have to be a military veteran with VA eligibility. The rural housing program is available to anyone, but you have to be willing to by a home that somewhat removed from the city. (See here for the USDA’s map of eligible areas).

Most everyone else will need to have a down payment of at leat 3.5% of the purchase price to qualify for an FHA loan and 5% for a conventional loan. The FHA allows that 3.5% to be a gift from family or friends but with conventional loan the 5% needs to be your own savings.

So while there are some good no money down programs available, those programs aren’t for everyone. In many cases at least a small down payment will still be necessary.

If you are interested in buying a home contact us in the form on this page today to learn more or to get help pre-qualifying.

There was an interesting segment that aired on Yahoo Finance recently. The basic point was that there are many Americans who have never refinanced at all and as a result are paying too much in interest on their mortgages. If you know someone who has never refinanced or who has an interest rate that is too high have them contact us right away to see if they are wasting money on a mortgage that it too expensive.

Here is that clip:

While there are some government programs the allow for zero money down on home purchases, those programs don’t work for everyone. As a result, most home buyers need at least a 3.5% down payment to purchase a home. This time of year it is common for families to use a tax refund as part of their their down payment funds. The timing of tax refund checks aligns nicely with the start of spring, when there is traditionally an increase of homes being put up for sale.

See our home purchase page for more information on the various government-backed home purchase programs. If you have been worried about not having enough of a down payment to qualify for a home purchase, this is a good time of year to get qualified as tax refunds come in. Contact us on that home purchase page to learn more.